Cardano Developer Seeks Reduced Funding for Expansion and DeFi Integration

Input Output, the company responsible for building and maintaining the Cardano blockchain, is seeking a substantially lower amount of funding from the project's treasury compared to last year. The company has submitted nine proposals totaling $46.8 million for 2026, marking a decrease from the $97.5 million requested in 2025. These proposals focus on enhancing Cardano's scalability and exploring Bitcoin DeFi opportunities. Cardano, similar to other major blockchains, has a communal fund fueled by network fees, which is allocated by community representatives through a voting process. Historically, Input Output has been the largest recipient of these funds due to its significant role in developing the blockchain's underlying software. However, the reduced funding request is part of a broader plan to reduce Input Output's dependency on community funds. The company aims to gradually decrease its annual funding requests until it can sustain itself through its own revenue, allowing community funds to support a wider range of smaller engineering groups. By the end of 2026, Input Output anticipates that smaller, specialized teams will take over most of its in-house work, including firms like VacuumLabs and Midgard Labs that focus on specific aspects of the Cardano software. The proposals are centered around two key themes: scaling and Bitcoin DeFi. A significant portion of the funds will be allocated to a consensus upgrade called Leios, which is expected to increase Cardano's transaction processing capacity by 10 to 65 times, potentially reaching over 1,000 transactions per second. This upgrade is scheduled for a test release in June and full deployment by the end of the year. Another flagship proposal focuses on a system called Pogun, designed to integrate Bitcoin-based decentralized finance into Cardano. This system would enable bitcoin holders to borrow and earn yield on their holdings without relying on centralized intermediaries. The lending component of Pogun is targeted for public release in the second quarter. Smaller proposals address performance enhancements to Cardano's smart contract engine, security testing infrastructure, developer tools, and expanded API services. Each proposal outlines specific delivery leads and ties funding to delivery milestones, ensuring a staged release of funds based on progress. Voting on these proposals is set to begin and will run through May 24, with decisions made by approximately 1,000 elected delegates representing ADA holders. The outcome of this vote will test whether Cardano's governance treats Input Output like any other grant applicant or continues to approve its requests based on historical deference. The Cardano community's approach to funding development has evolved significantly over the past two years, with the Cardano Foundation taking over the project's grant-funding arm and Intersect assuming stewardship of core Cardano software. These changes mean that alternatives to Input Output now exist, potentially influencing the voting outcome. Input Output also highlighted progress within the ecosystem, including the launch of a new Cardano stablecoin, USDCx, which has reached 14.6 million tokens in circulation, and an increase in total assets deposited on Cardano. The outcome of the vote will signal how the Cardano community's perspective has shifted, given the existence of tools to fund development beyond Input Output.